Insurance & LiensQuestion 1521 of 1605
Which is the BEST description of the relationship between a payment bond and subcontractors' lien rights on a private project?
a.The payment bond is only for the owner's benefit and helps no subcontractor
b.The payment bond replaces the need for a preliminary notice
c.The payment bond eliminates all lien rights of subcontractors
d.The payment bond gives subs an additional source of recovery (the surety) alongside potential lien and stop-notice remedies
Explanation
A payment bond provides subcontractors and suppliers an added avenue of recovery against the surety if they are not paid, supplementing lien and stop payment notice remedies. It does not by itself extinguish lien rights or excuse required preliminary notices.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)